Madhanlal Goenka & ANR. Vs. M/S Rugmini Ram Raghav Spinners P. Ltd. 
Insc 731 (13 April 2009)
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL No..............OF
2009 (Arising out of SLP (Crl.) No. 6482 of 2006) Ravindra Kumar Madhanlal
Goenka & Anr. .....Appellants Versus M/s. Rugmini Ram Raghav Spinners
1. Leave granted.
2. This appeal arises
out of the judgment and order dated 30.08.2006 passed by the Madras High Court
in Criminal Original Petition No. 4556 of 2006 whereby the learned Single Judge
of the High Court dismissed the petition filed under Section 482 of the Code of
Criminal Procedure (in short `CrPC') by the appellants for quashing criminal
complaint filed against them by the respondents before the Judicial Magistrate,
Coimbatore, Tamil Nadu.
3. Facts in brief, as
alleged by the appellants, are as follows:
Madhanlal Goenka - Accused No. 1 ( 1st appellant herein) is the proprietor of
M/s. Ravindera Kumar Madhanlal having its office at Shri Ganesh Complex,
Kothadi Bazar, Akola - 444001, Maharashtra and is a General Merchant and
Commission Agent for various food items like sugar, jaggery, oil seeds, oil,
grains, pulses and cotton etc. It was dealing in cotton as commission agent for
various persons belonging to different places in different states including
Coimbatore in Tamil Nadu.
The proprietorship of
the 1st appellant is registered with the Sales Tax Department of Maharashtra.
Srimathi Ravindra Kumar Madhanlal Goenka - Accused No. 2 (2nd appellant herein)
is stated to be a partner in the firm.
Accused-2 is a broker
cum dealer and Accused-3 his wife, a partner and Accused-4 is his
sub-broker/agent. The present appeal has been filed by Accused-1 (1st
appellant) and Accused-2 (2nd appellant).
4. The respondent
through his agents approached the 1st appellant by personally visiting Akola
and ordered cotton bales to manufacture yarn.
The agents had stayed
for about 45 days at Akola and after examining the quality of cotton and after
their approval the cotton was transported to the respondent for which the
respondent offered 1% commission to the 1st appellant. The 1st appellant by
raising bank loan gave the same to the cotton manufacturers and dealers and
bought from them and thereafter, as requested by the respondent, transported
the same to Coimbatore. It was a practice that entire advance amount was to be
paid at the time of ordering cotton. The respondent after gaining confidence of
the 1st appellant some time used to send even lesser amount than the actual
value of the cotton but even then the 1st appellant used to send cotton bales
over and above the advance amount paid by the respondent.
The advance amount
used to be sent by the respondent by telegraph transfer and every transfer was
accounted by both the respondent as well as 1st appellant.
5. During the course
of their business transaction the respondent had developed some problem with
their two commission agents belonging to Coimbatore with regard to the payment
of compensation and other expenses. The appellant had sent a fax message on
12.2.2004 to the respondent giving statement of accounts by showing that the
amount lying with him is Rs. 4,74,521/- and requested him to send balance money
for sending 100 bales and also requested to send the `C' Form. In response to
the above fax, on 15.02.2004, the respondent sent a fax stating that the
closing balance with the 1st appellant is Rs. 4,76,521/-.
respondent through his agents requested the 1st appellant to send totaling 145
bales of cotton and it was confirmed by the fax messages dated 18.2.2004 of his
agent Mr. Srinivas R. Lele wherein he made specific request to send the 145
bales after receiving the entire amount and also by deducting = % commission
payable to him. The 1st appellant, vide his fax message dated 20.2.004
requested the respondent to send the remaining amount for lifting of 145 bales,
which was weighed by his new controller and also requested him to settle all
the amount by sending the statement of account along with the fax.
respondent by return fax disputed the 1st appellant's claim and allegedly made
some false statement. Again, the 1st appellant by another fax requested the
respondent to send the remaining balance including the late fee in accordance with
the terms and conditions. The second condition in the invoice was that 24%
interest would be levied upon accounts remaining unpaid 30 days from the date
of dispatched goods. The 1st appellant claimed late fee interest in accordance
with the above terms. However, the respondent did not make such payment.
Some further dispute
arose between the parties.
6. Subsequently, the
1st appellant approached the Akola Police for filing a complaint. However, the
same was not entertained and registered stating that the transaction was purely
commercial and civil in nature and the business disputes cannot be resolved by
criminal prosecution. In the meanwhile, the respondent filed a complaint under
Section 200 CrPC before the Judicial Magistrate No. 1 at Coimbatore for
offences u/s 406, 420 and 384 of the Indian Penal Code (in short `IPC'. The
court vide order dated 2.8.2004 issued an order directing the Thudiyalur Police
to register a case under Section 406, 420 and 384 IPC and submit their final
report within 3 months. The case was registered on 21.8.2004 after receipt of
the court order on 9.8.2004. Subsequently, the respondent also filed a private
complaint under Section 190 and 200 Cr.PC for offences punishable under
Sections 120-B, 406, 420 and 384 IPC by implicating the 2nd appellant, who is
the wife of the 1st appellant and one Srinivasa Lele who is the agent of the
respondent. The Judicial Magistrate No. 1 at Coimbatore on the basis of such
complaint issued summons to the appellants to appear before the court on
7. Aggrieved by the
aforesaid order of the learned Judicial Magistrate No. 1, the appellants
approached the High Court for quashing the criminal proceedings against them by
filing Criminal Original Petition No. 4556 of 2006 which was dismissed by the
High Court. The High Court held that a perusal of allegations mentioned against
the accused show that a prima facie case is made out but only the trial court
may have to look into the defence materials produced by the appellants and
admittedly, there was business transaction wherein 900 bales of cotton were
already dispatched but 100 bales of cotton were yet to be dispatched.
Accordingly, the High
Court refused to quash the proceeding.
8. Aggrieved by the
said order of the High Court, the present SLP has been preferred. It is the
case of the appellant the no criminal proceeding can be initiated as the
matters are essentially civil in nature and business disputes cannot be
resolved by criminal prosecution. It is the case of the appellant that 1st
appellant at the request of the respondent procured 145 bales and kept for long
time with the dealers place and as the respondent failed to make payment
despite for waiting long duration, the 1st appellant had stored the 145 bales
of cotton in the Central Ware House at Akola on 18.03.2004 by paying regular
rent and it was being extended from time to time and still the bales procured
for him is remain at Central Ware House, Akola. It was contended that had the
respondent paid the entire amount for the 145 bales, the 1st appellant could
have dispatched the bales to the respondent. It is the case of the appellant
that the entire amount had already been invested in procuring bales for him by
investing additional amount of another Rs. 10 lakhs by raising bank loan by the
1st appellant. Hence, there was no cheating or fraud played by the 1st
appellant. In view of the same it was contended that it was an alleged breach
of contract that's also only at the last stage of the performance of the
agreement which was due to dispute of payment of the entire advance amount. In
view of this, the High Court ought to have quashed the criminal proceedings
initiated by the respondents.
9. The scope of power
under Section 482 CrPC has been explained in a series of decisions by this
Court. In Nagawwa v. Veeranna Shivalingappa Konjalgi [1976 (3) SCC 736], it was
held that the Magistrate while issuing process against the accused should
satisfy himself as to whether the allegations in the complaint, if proved,
would ultimately end in the conviction of the accused. It was held that the
order of Magistrate issuing process against the accused could be quashed under
the following circumstances: (SCC p. 741, para 5) "(1) Where the
allegations made in the complaint or the statements of the witnesses recorded
in support of the same taken at their face value make out absolutely no case
against the accused or the complaint does not disclose the essential
ingredients of an offence which is alleged against the accused;
(2) Where the
allegations made in the complaint are patently absurd and inherently improbable
so that no prudent person can ever reach a conclusion that there is sufficient
ground for proceeding against the accused;
(3) Where the
discretion exercised by the Magistrate in issuing process is capricious and
arbitrary having been based either on no evidence or on materials which are
wholly irrelevant or inadmissible; and (4) Where the complaint suffers from
fundamental legal defects, such as, want of sanction, or absence of a complaint
by legally competent authority and the like."
10. In State of
Haryana v. Bhajan Lal [1992 Supp. (1) SCC 335], a question came up for
consideration as to whether quashing of the FIR filed against the respondent
Bhajan Lal for the offences under Sections 161 and 165 IPC and Section 5(2) of
the Prevention of Corruption Act was proper and legal. Reversing the order
passed by the High Court, this Court explained the circumstances under which such
power could be exercised. Apart from reiterating the earlier norms laid down by
this Court, it was further explained that such power could be exercised where
the allegations made in the FIR or complaint are so absurd and inherently
improbable on the basis of which no prudent person can ever reach a just
conclusion that there is sufficient ground for proceeding against the accused.
However, this Court in Rupan Deol Bajaj v. Kanwar Pal Singh Gill [1995 (6) SCC
194] held (at SCC p. 209, para 23) that "at the stage of quashing an FIR
or complaint the High Court is not justified in embarking upon an inquiry as to
the probability, reliability or genuineness of the allegations made
11. In Pratibha Rani
v. Suraj Kumar [1985 (2) SCC 370], the question arose that when the civil as
well as the criminal remedy is available to a party, can a criminal prosecution
be completely barred. In this case, the matter related to the stridhan
property. The complainant alleged that her husband, father-in-law and other
relatives misappropriated her jewellery and other valuable articles entrusted
to them by her parents at the time of marriage. The complainant alleged that
these dowry articles were meant for her exclusive use and that the accused
misbehaved and maltreated her and ultimately he turned her out without
returning the dowry articles.
The accused filed a
criminal miscellaneous petition under Section 482 for quashing the criminal
proceedings and the High Court quashed the same. The accused contended that the
dispute was of a civil nature and no criminal prosecution would lie. Under that
circumstance, this Court held in para 21 at pp. 382-83 as under:
"21. There are a
large number of cases where criminal law and civil law can run side by side.
The two remedies are not mutually exclusive but clearly coextensive and
essentially differ in their content and consequence. The object of the criminal
law is to punish an offender who commits an offence against a person, property
or the State for which the accused, on proof of the offence, is deprived of his
liberty and in some cases even his life. This does not, however, affect the
civil remedies at all for suing the wrongdoer in cases like arson, accidents,
etc. It is an anathema to suppose that when a civil remedy is available, a
criminal prosecution is completely barred. The two types of actions are quite
different in content, scope and import."
12. This Court in the
case of Indian Oil Corpn. v. NEPC India Ltd. [2006 (6) SCC 736], at has observed
as under :
principles relating to exercise of jurisdiction under Section 482 of the Code
of Criminal Procedure to quash complaints and criminal proceedings have been
stated and reiterated by this Court in several decisions. To mention a few
--Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre, State of
Haryana v. Bhajan Lal, Rupan Deol Bajaj v. Kanwar Pal Singh Gill, Central
Bureau of Investigation v. Duncans Agro Industries Ltd., State of Bihar v.
Rajendra Agrawalla, Rajesh Bajaj v. State NCT of Delhi, Medchl Chemicals &
Pharma (P) Ltd. v. Biological E. Ltd., Hridaya Ranjan Prasad Verma v. State of
Bihar, M. Krishnan v. Vijay Singh and Zandu Pharmaceutical Works Ltd. v. Mohd.
Sharaful Haque.. The principles, relevant to our purpose are:
(i) A complaint can
be quashed where the allegations made in the complaint, even if they are taken
at their face value and accepted in their entirety, do not prima facie
constitute any offence or make out the case alleged against the accused.
For this purpose, the
complaint has to be examined as a whole, but without examining the merits of
Neither a detailed
inquiry nor a meticulous analysis of the material nor an assessment of the
reliability or genuineness of the allegations in the complaint, is warranted
while examining prayer for quashing of a complaint.
(ii) A complaint may
also be quashed where it is a clear abuse of the process of the court, as when
the criminal proceeding is found to have been initiated with mala fides/malice
for wreaking vengeance or to cause harm, or where the allegations are absurd
and inherently improbable.
(iii) The power to
quash shall not, however, be used to stifle or scuttle a legitimate
prosecution. The power should be used sparingly and with abundant caution.
(iv) The complaint is
not required to verbatim reproduce the legal ingredients of the offence
alleged. If the necessary factual foundation is laid in the complaint, merely
on the ground that a few ingredients have not been stated in detail, the
proceedings should not be quashed. Quashing of the complaint is warranted only
where the complaint is so bereft of even the basic facts which are absolutely
necessary for making out the offence.
(v) A given set of
facts may make out: (a) purely a civil wrong;
or (b) purely a
criminal offence; or (c) a civil wrong as also a criminal offence. A commercial
transaction or a contractual dispute, apart from furnishing a cause of action
for seeking remedy in civil law, may also involve a criminal offence. As the
nature and scope of a civil proceeding are different from a criminal
proceeding, the mere fact that the complaint relates to a commercial
transaction or breach of contract, for which a civil remedy is available or has
been availed, is not by itself a ground to quash the criminal proceedings. The
test is whether the allegations in the complaint disclose a criminal offence or
13. The appellant has
placed reliance on a decision of this Court in the case of Uma Shankar Gopalika
v. State of Bihar [2005 (10) SCC 336], at page 338, wherein this Court has
observed as follows :
"7. In our view
petition of complaint does not disclose any criminal offence at all much less
any offence either under Section 420 or Section 120-B IPC and the present case
is a case of purely civil dispute between the parties for which remedy lies
before a civil court by filing a properly constituted suit. In our opinion, in
view of these facts allowing the police investigation to continue would amount
to an abuse of the process of court and to prevent the same it was just and
expedient for the High Court to quash the same by exercising the powers under
Section 482 CrPC which it has erroneously refused."
14. In the
abovementioned case, this Court has taken the view that when the complaint does
not disclose any criminal offence, the proceeding is liable to be quashed under
Section 482 CrPC. However, the same is not the situation in the present case.
There is no denial of the fact that though 900 bales of cotton was already
dispatched, but 100 bales of cotton are yet to be dispatched. The defence
raised by the appellant hereinabove can be urged and proved only during the
course of trial. While entertaining a petition under Section 482 CrPC, the materials
furnished by the defence cannot be looked into and the defence materials can be
entertained only at the time of trial. It is well settled position of law that when
there are prima facie materials available, a petition for quashing the criminal
proceedings cannot be entertained. The investigating agency should have had the
freedom to go into the whole gamut of the allegations and to reach a conclusion
of its own. Pre-emption of such investigation would be justified only in very
the facts of the present case, we are of the considered opinion that the
present case is not one of those extreme cases where criminal prosecution can
be quashed by the court at the very threshold.
A defence case is
pleaded but such defence is required to be considered at a later stage and not
at this stage. The appellants would have ample opportunity to raise all the
issues urged in this appeal at an appropriate later stage, where such pleas
would be and could be properly analysed and scrutinized.
16.In view of the
aforesaid position, we decline to interfere with the criminal proceeding at
this stage. The appeal is consequently dismissed.